**A** (00:04):
All right. Usually the beginning is usually where I screw up the most, so might. Might do this twice.
**B** (00:10):
No worries.
**A** (00:12):
All right, welcome, everybody. I've got Sunny here, co founder of Osmosis. First time he's appearing on the channel. And I normally do a long introduction. I'm not going to do that. We're going to get right into the fun stuff. Do some yes or no questions, some questions about osmo, questions about the platform and the ecosystem. I've also got a tweet by Sunny, probably not the one that he thinks it is, that we could talk about a little bit because I thought it was pretty, pretty interesting. Sunny, man, thanks so much for joining.
**B** (00:45):
Thanks for having me on. I know it's been a. We've been trying to get this set up for, like, probably like close to nine months at this point, and it was a while. Yeah. So happy you finally got it. We're here now.
**A** (00:55):
All right, so most people that if they watch my channel or they follow me on Twitter, they know that I. I basically rebalance my entire portfolio at near the bottom of the bear market. So I get a lot of crap for selling the bottom. I'm like, oh, you're an idiot. You sold the bottom. You sold all your Osmo whatever. I, I soured on Dex tokens. I repositioned. But I know that a lot of things change with the OSMO token. I don't know that much about Osmo 2.0, so we'll definitely talk about that a little bit in the beginning. After a while, it's tiresome to hear about all these tokenomics redesigns, so I usually don't get into the. Into the details, but let's start with yes or no questions. This is the hardest part of the interview for both of us, usually, but let's see if we can do it. Okay.
**B** (01:44):
I'm going to try to stick to just a yes or no.
**A** (01:46):
I appreciate. I know you can do it. And by the way, for people that are just hearing about Osmosis for the first time, it's a Dex that's in Cosmos, but it's not an app on the Cosmos hub. It's its own blockchain. The Dex is the premium, the premier product, let's say. So that's the context that you need to follow this interview along. Number one question, this is for. For my haters out there anyway. Can users short the Osmo token on your platform?
**B** (02:16):
Yes, you can.
**A** (02:18):
Okay. But not. Not where I live, I guess. All right. Number two, is Osmosis still an app chain?
**B** (02:26):
Yes, okay, that's a.
**A** (02:28):
Okay. Number three. And this is based on something I heard you say at one of the crypto events a couple weeks ago. Is being the Robin Hood of crypto a realistic goal?
**B** (02:42):
Yes.
**A** (02:43):
All right. And have you on Twitter blocked anyone from either the Kajira or Neutron teams?
**B** (02:55):
No.
**A** (02:56):
No. Okay. All right. Actually, let me add a fifth question, because I know that you either you. You host poker games or you sometimes playing poker games with some crypto people. Would you consider yourself of fish in poker?
**B** (03:09):
Yes.
**A** (03:09):
Oh, you would? Okay. All right. All right, all right. Good. That's the first time anyone's ever gone through five questions. Yes or no. Carter was like, really close twice. Almost. No one can do it, but we'll deep dive now. Now we'll get into the conversation. Osmosis to me is Osmosis to me, for better or for worse, is the key to the whole Cosmos ecosystem. The way it's been designed. First decks, pretty much the first real app that a lot of people can use in Cosmos. Now we've got 75 chains, and there probably aren't that many people on these other chains compared to Osmosis, it's the, it's the main place where people would trade, I would imagine. Right. But I want to go back to one of your quotes about being the Robin Hood of crypto. I think that's an interesting quote. Right. It's a, it's. It's a good goal. You said it's realistic. What would, what would need to happen to. To be able to say, yes, we're as close as we can get to being the Robin Hood of crypto? How do you envision that?
**B** (04:14):
Okay, so what, what, what does that involve? Right. I think one is really nailing the ux. I like, I think Robinhood part of what, you know, there's a lot of things that made it successful. Right. It was like the first one of the first 0 trading fee, like place where people trade stocks and stuff. But I think a big, big part of it was just how good the UX and UI was. Right. Like, you know, I, I just remember when the first time I used it and you did that little swipe up and it, like this little thing when you, like, bought your first stock, it was like, it felt like a, you know, very delightful experience. And I think that there's a lot we can learn from there. How do we build like such, you know, delightful experiences for. For users.
**A** (04:56):
So a big osmosis compared to other Dexes. To be fair, from Launch has been pretty user friendly. To me, I always consider Uniswap version 2 to be just great for a new user. The clicking not so great. But the, but the, the website itself, right?
**B** (05:14):
Yeah, so there's that. Yeah. So a lot of. I think we, that was a big focus of ours from the beginning and I think there's still a long way to go on making that more user friendly. One of the big things we're focused on right now is smart accounts or account abstraction, which is this, like how do you onboard onto this? We have this goal that majority of users probably should not be using wallets. Like having to download a browser extension wallet. Browser extension wallets, very good for security purposes, but like not great from the UX perspective. Right. And if most people are trading like smaller amounts right to onboard, they should probably start with something that's like simpler. And so we're working on a lot of functionality that should make it so you can just hop in and sign up. Make the sign up flow feel much more akin to a Web2 app than a, you know, most crypto apps.
**A** (06:13):
So like email or simple username password.
**B** (06:16):
Username. Yeah, username. It'll be. Yeah, it'll be like a username. There's this new standard called pass keys that you may have started to see around. But what that basically means is it'll use your, like, let's say you have a MacBook, it'll use your Touch ID or if you have a phone, it'll use like face ID or something like that to log in.
**A** (06:35):
Got it. All right. So in other words, and I've heard this from a lot of gaming projects, they want to make it so that people don't necessarily need to know anything about blockchain, maybe not even know much about crypto to be able to use whatever application is being built. It makes sense. What else do you think needs to get abstracted away to have that feel like a Robin Hood or you know, some of the simpler web two apps, whether it be eBay or like Walmart.com something like that, people should just open it. It's intuitive. What else needs to get abstracted away?
**B** (07:11):
Yeah, one of the things that we knew how to and has already been done is fees. Right. Like I think one of the big problems was like every, almost every chain today you had to, you have to pay fees in a specific token. Right. On Ethereum you have to pay an eth. And you know, with osmosis we realized that's a little bit silly. So we actually built a system that allows you to pay your fees On Osmosis, in any token you want to pay in, in Osmo, you want to pay in usdc, you want to pay in Atom, you want to pay in Tether, Bitcoin, whatever you, you pick it, you can, you can, you can pay your fees in that. So that was a big one. Another one that I think is very important that we need to tackle and solve is like on ramping. I think almost every decks you go to today or almost every DAP has like a buy tokens button, right? You go on Uniswap, it has a buy tokens button, but it opens up this Moon pay modal that does like very, feels very abstracted away from the rest of the ux. And admittedly Osmosis does this today as well. You click buy Tokens, you know, we give you the options of Transact or Cato and stuff, but you know, we want, you go on Coinbase. Like, you know you have like the buy sell swap, right? And buy and sell are just this, like it's about buying crypto with Fiat. But like, it's like very ingrained into the experience, right? And I think that's something that needs to be abstracted away. This like making how do we make like the pro experience of like going from fiat to crypto and out of and out, like have a similar UX flows to just swapping between different cryptos.
**A** (08:48):
For a user. Let's say I, I was using osmosis and then all of a sudden everything crashed. I haven't logged back in until today. There has. The platform has evolved, right? There's been a lot of changes. The two most obvious changes from the user perspective would be the supercharged pools and new stablecoin liquidity. No more ust. We got native usdc, we got bridged usdc. To me, those would be the two biggest changes in your mind. What's like the third one that maybe the end user doesn't see but you think is critical to the platform kind of changing over time?
**B** (09:35):
I think maybe the third biggest change kind of a little bit related to one of the yes or no questions you asked at the beginning is that you'll see a larger set of apps and functionality in Osmosis, right? So you have, you know, you asked about, can you short osmo? If you asked, you know, a year ago the answer would have been no, right? But now actually there are multiple like ways for you to short. You can short on margin using Mars, or you can short in perps using Levana, or you can take like an even more like Exotic short position on power perps using margin. So there's a lot more features and apps that are built into the osmosis flow.
**A** (10:25):
Right. And the reason why I asked that question is because most people would consider an app chain. It's a blockchain with one app on it. If you have these ancillary apps that are driving volume to the main app, I think that's still, that's still an app chain. Right? You're, you're complementing it. It's not like you have three Dexes on the, on the same, on the same chain. So you've got. I used Calc Finance on Osmosis. I can't use Levana or Mars. That's okay. I live in, in New York. You're not allowed to do anything in New York to make money. So what else is there? What am I missing? Yeah, is it mainly those three or am I missing stuff?
**B** (11:05):
Yeah, so you mentioned Mars, you mentioned Levana. Well, what's great is you can go on the osmosis site actually, and there's a little app store there that you can see to see all the apps. But some of the ones, you know, maybe worth highlighting. The other perps protocol I mentioned was margined. So margined is a very unique types of, type of perps protocol where it's called a power per. What it does is if you're, you're basically long, if you're longing, you're getting exposure to the square of the price of the asset. So normally when you take a leverage, you take a 2x leverage. Right. Or something like that. Right. So, you know, OSMO goes up, you know, 1x100%, your PER position goes up 200%. But what's interesting about power per is if OSMO goes up, you know, 200%, your per position goes up 400%. If it goes Osmo goes up 300%, your per position goes up 900%. It follows this like, square law, which is really powerful. Obviously you have to pay a high fee for this. It's similar to options where, you know, you have asymmetric, you know, power probe. You can consider it. It's like a very defi, a crypto native version of options trading that you would normally see on, you know, tradfi. For some reason, options haven't really gotten as much product market fit in crypto as they have in tradfi. But that's, but, you know, if you look on Robinhood, options trading is actually very popular. And so power perps are sort of a attempt to bring Options like modify a little bit. How option the. The design of options to make it work for crypto native. Some other apps always. Oh, good.
**A** (12:51):
I'll link. I'll link that app store down below. Some people may have missed it. I mean, the, the website's so clean, you know. Yeah, I'll definitely link it below. But yeah, you can continue. Sorry about that.
**B** (13:02):
All right, no worries. I mean, some other apps just like worth highlighting. Stream Swap is like a launch pad. A couple tokens launched right there. Membrane is a native stable coin in the osmosis ecosystem. Quasar does a bunch of vaults. So you mentioned Liquidity has shifted away from these classical pools, XYK into concentrated liquidity. And that is harder for the average person to know LP into. And so because of that, these vault products come along. So Quasar has a vaults product. Astroport will be launching their vault product on Osmosis within the next two weeks. And so these will. These sort of give it away of like you just someone who doesn't want to sit there and actively manage their positions, they can just deposit into these things and these protocols will manage positions on their behalf.
**A** (13:55):
Right. And those are the supercharged pools that people see now. So they're the model similar to Uniswap version 3, which when I first saw that, I said, wow, this makes perfect sense. But I can't pay these eth gas fees every time I want to adjust my position in Cosmos. The gas fees are almost nothing.
**B** (14:12):
Right.
**A** (14:13):
Like, what's the average gas fee on Osmosis? A penny or less? Something like that. It's it. You could, if you had the time, you could manage your position. But there are supplemental apps on Osmosis that do it, that are meant to do it for you. So again, yeah, app chain thesis. I think it doesn't need to be one app. It could be one feature app. Whether it's stargaze, Osmosis, and then other apps that are, let's say, allowed on the chain via governance to either drive volume or leverage that. That core application. Because it started off with just one app. Right. And now.
**B** (14:51):
Exactly. It has to be a coalition of apps that are very value additive to each other. Right. They're either bringing volume to Osmosis or they're bringing a new set of, like, users that will eventually bring volume to Osmosis.
**A** (15:06):
Right. And I think it makes sense to be permissioned for that for that particular reason. So in Cosmos, you basically have the app chains like Osmosis. They're permissioned. Stargaze also, although they Flirted with the idea of going permissionless and then on the other side you have permissionless all purpose smart contract platforms. Anyone can deploy anything at any time. There's no voting. But I think for Osmosis's purpose, I think it makes perfect sense to be permissioned. I think that's perfectly fine. You don't want people launching Ponzi after Ponzi on, on every single chain. We have Juno for that and, and Terra. Right. So we, we don't need it on every chain. Plus you want the other apps to, like you said, basically assist in the adoption of the, of the main app. So it makes perfect sense. Makes perfect sense. A couple questions about tokens. Two types of tokens really that I see on, on Osmosis. There's the OSMO token which is very unique. You could, you could look at it as a dex token. It's really a lot more than that compared to other dexes because Osmosis is its own chain. So the OSMO token, it's the staking token, right. Use it to vote in governance, provide liquidity, pay gas, MEV pay devs also transact across other chains. Did I miss anything? What else does the OSMO token get used for?
**B** (16:38):
Can you repeat the one you just said again?
**A** (16:40):
So staking, voting, providing liquidity, paying gas MEV paying devs transact across multiple chains. Is that. Yeah, that's about it, right? It's a lot.
**B** (16:53):
Yeah. I mean obviously like there's what, what happens when you stake it, right. You earn some of the revenues from the chain that I guess that's know there's the pro. There's different sources of protocol revenue at this point, but you do have to do something active to do that. You have to stake the tokens in order to and like, you know, be an active community member to like participant in the network to do that by staking. But otherwise, no, I think, I think that covers it.
**A** (17:26):
Yeah. And then we've got the LP tokens which are basically, I call them like placeholder tokens. You supply liquidity OSMO atom, you get another token representing your, your position. I guess what's stopping me from being able to use those LP tokens for other functions across the interchange. I know that you could use certain ones to vote and stick. That to me was a huge advancement in, in LP tokens, but in my mind the LPers are taking on a lot of risk.
**B** (17:58):
Yeah.
**A** (17:58):
They're also making the platform work versus passive stakers. You're securing the network. Great. You're voting for policies that affect the LP directly and they're choosing between voting and LPing. So I guess what needs to change to be able to use those LP tokens for other things. Maybe buy an NFT on stargaze, or maybe take them and borrow against them or. Or use them as liquidity on another decks somewhere else. Is there a reason why we can't do that?
**B** (18:28):
So you actually can do this already? So fun, fun story. Part of what actually got me into DeFi, you know, before getting into DFI I was working on Cosmos SDK and stuff, but very much as focused at the L1 protocol level, building this core stack, not really that interested in the applications on top. But then what got me excited was the Sushi Swap Vampire attack on Uniswap. And for anyone I can just give a quick summary. So how that worked was Uniswap similar to most chains pools at the time v2, when you deposit liquidity, you get these LP shares, these tokens, fungible tokens, but no one was really doing that much with them. They were just sitting there and it's like, okay, cool. Sushiswap came along and they came up with this way of how do we steal market share from Uniswap? And what they did was they made a contract that basically said, hey, take your Uniswap LP shares and deposit it into our SMART contract, into our Vampire contract, and then you'll start earning sushi rewards. And then what's going to happen is at exactly two weeks from now, this contract, which now owns all these LP shares, they're going to pull all that liquidity out of Uniswap and put deploy it into Sushiswap and then give you the LP shares for Sushi swap. And they ended up stealing, I think like close to 70% of Uniswap's liquidity using this technique. And I just saw that, I was.
**A** (20:07):
Like, whoa, that was so cool.
**B** (20:09):
That was like the first time anyone really made use of those LP tokens for other than something other than just an accounting tool, right? They actually like you did something with them. And that just blew my mind because I was like, whoa. We just tokenized the concept of liquidity. And that's like so cool. And so that's what got me into DeFi, excited about DeFi and really started going down the rabbit hole. So anyway, so tokenized LP shares, very interesting. So going back to like, how can you use it on osmosis? So one of the first things we did was like you mentioned super fluid staking was we said, hey, These LP shares, why can't we allow these to be usable, useful in proof of stake? So that's, that's, that's one of the things we did. We actually.
**A** (20:55):
Yeah, I think, I think it was great. It sends the right message, right. It says look, all these proposals go on chain. A lot of them directly impact the, the lp' ers but they're, they're deciding to LP which means they can't vote. And I probably every decks up until then, at least that I know of you, you had, you had a choice to make. And now with Super Fluid staking a portion of that LP was a 25 or something like that of the value of an OSMO pair. One by one they were kind of green lit to be able to state something like that.
**B** (21:32):
Another use case of what some you. Mars has a leveraged LPing system. So it. In Mars they've actually whitelisted certain LP shares to be able to be used as collateral.
**A** (21:46):
Yeah.
**B** (21:47):
In the Mars it makes sense if.
**A** (21:48):
We'Re all going to sit here and agree that these tokens have value. Well technically the LP token is somewhat diversified because it's two different tokens. I should be able to borrow against that, especially in a protocol that's building on your, your chain, right? Yeah, maybe, maybe not. Every single LP token should be taken at face value. There are lots of super low liquidity unproven tokens that are paired. That's not what I'm talking about. But Atom and a stablecoin OSMO and Adam, something like that should get some preferential treatment across the ecosystem. It can encourage more people to lp. Maybe it lessens the amount of inflationary rewards that different Dexes would need to use. And if I was, if I was selling NFTs on, on Stargaze, maybe I would want to take you know, From Pool Number 1 Osmo Atom tokens as payment because I know so many people have them. Right. Yeah, there's, there's a lot of money in, in certain pools out there. People probably don't even realize that there's a token in their wallet of that.
**B** (22:54):
You know one of the challenges with concentrated liquidity is while it's very good for the decks, it way more capital efficient. You lose that tokenization, fungible tokenizations and rather the positions are NFTs so they're not fungible with each other, which makes it harder to do this kind of stuff. But I think where we're going to see a comeback of it is a lot of those vaults that we talked about. Right. Like you can give it to Quasar. They can actually tokenize those vaults very easily. And so I think that those vault shares like the Quasar vaults or the Astroport vaults will be the new LP share liquidity tokens.
**A** (23:33):
And people, they're NFTs because they're. Each position is set sets a unique range at a specific at their own price ratio. Right. That's what makes them NFTs. Okay, that, that definitely makes sense. But I could definitely see there being a market for people to speculate on on that. Maybe not on osmosis, but let, let the NFT people figure out a way to buy and sell those things or gamble on them if anything, somehow. All right, I want to double back to the OSMO token. I didn't follow every development with OSMO 2.0. My knee jerk reaction was it didn't go far enough. I thought that the OSMO token was in trouble. Especially let's say a year ago into quarter two. I was like, holy, like if OSMO keeps going down, number one, it's going to hurt all the low liquidity tokens that are not listed on centralized exchanges paired against osmo. Number two, you have a governance problem because someone who doesn't even care about the ecosystem could come in and buy up these important governance tokens pretty cheap. Osmo 2.0 comes along. Didn't take long for the, for the token to reverse. It's performed pretty well. Right. What is like 5x to 7x from the bottom? I guess without going into too much detail, can you rattle off major differences with with OSMO 2.0 on the token if it does in fact give much better value accrual based on platform use. Just quick summary, we don't have to go into any one thing too too.
**B** (25:11):
Much OSMO to was a set of tokenomics changes mostly on the supply side. Right. There was separate things that happened on the demand side, not demand, but like the value accrual side. So maybe I'll talk about the value accrual first. Right. A number of protocol revenue systems went active around the same time, right. So first one that went live was protorev, which is basically a in protocol arbor. So you know, normally like when people route through pools, there'll be an arbbot that comes in and like back runs them and like, you know, get some profit. And we realized that hey, this could actually just be done by the protocol itself. And so that's the first one that that was built and that's Skip protocol. Skip. Yeah, Skip helped build this one and.
**A** (25:58):
From what I understand, this is very significant when the volume is high, right? Yep.
**B** (26:06):
The second one was taker fees. So taker fees basically is. Or take trading fees. Right. Like this is honestly, this is the bread and butter of every exchange. Right. Like taking exchange fees. So that's. That, that, that went up. There's 10 bips on any every trade now at this point. So yeah, that's the biggest source of revenue and, and then another one will be going live soon which is the MEV auctions. So MEV auctions is basically at the beginning we sell off the right for the first transaction in a block and that's valuable because usually people want to use that to if there's liquidations to be done or arbitrages against centralized exchanges, there's value in being that first transaction, first to act. And so yeah, people will pay for that and that will be another source of revenue.
**A** (27:01):
Interesting.
**B** (27:01):
We have revenue going on but then.
**A** (27:03):
The other thing, the end user is not really going to notice these things.
**B** (27:08):
They'll notice it in the increased staking apr. So osmosis actually just on our site we launched a staking page, a native staking page now because we like obviously there's a lot of staking pages out there. You have Keplers and leaps and all these sorts of things. We just had a slightly different take on how we wanted the UX of staking to work. We didn't want you have to select validators every single time. We came up with this concept of stake squads where you say hey, this is my stake squad and what I want to do is just every time I stake I just want to keep delegating to the same stake squad again and again and you can add and remove people from your stake squad. So we just have this different UX around how it works. That's why we built this native staking page. But you'll notice people started noticing like hey, why is this saying like you know, 16% APR while Kepler's says 7 like 9% APR. Like why is it, why is there such a big difference? And because our native one is actually accounting for all of these other protocol revenues sources. So the Kepler one is only doing inflationary APR while that other 7% that our site is showing is coming from this like actual protocol revenues.
**A** (28:27):
That makes sense. That makes sense. And, and there will be times where the protocol revenue is going to outpace the inflationary rewards. I don't know how close you've come now. I don't consider this like a full on bull market, but I know looking at Skip protocols numbers, the way he was shown to me during these high volume times, the MeV capture on osmosis is going to be enormous. You know. Yeah, it might be in very small windows of time, but if you're staking long term, you don't care when that is. You just know that that capture is going to go to stakers and it, it's more, I guess, more beneficial to stake now because it's not only inflationary rewards. You're, you're, you're capturing value from the actual use of the decks. Is that a simple way to put it? Okay, Yeah. I want to change paces now really quick. I got a good tweet from you. Let's see if we can get this to display and display both of our faces at the same time. Oh, there we go. So here's the tweet. There are certain people in Cosmos that I think at times come off as like bitcoin maxis, deep down.
**B** (29:37):
Right.
**A** (29:37):
I don't know if you would fit in that category, but maybe I do see like these super pro bitcoin tweets every once in a while in Cosmos. I don't think I see that in most other ecosystems, especially not like where I came from, which is Cardano. Right. They, they don't acknowledge other tokens. Osmosis will be the biggest decks for bitcoin by end of 2024. How's that happening? Is that pretty part of this, this like ideal? Like, let's get to robinhood status in Web3. To do that, bitcoin has to be involved. It's the number one token. So explain this a little bit.
**B** (30:13):
Yeah, so I mean, I definitely agree that Cosmos definitely has a lot of closeted bitcoin maxis.
**A** (30:21):
I think so too.
**B** (30:21):
I am definitely one.
**A** (30:24):
I'm in there too.
**B** (30:25):
What's interesting is if you look at the Cosmos ICO that, like the Atom ICO, like from 2017, it was actually one of the few ICOs that was raised in. Most ICOs were raised in ETH. Right. The Cosmos one was actually raised in both ETH and bitcoin. And I think almost like a little bit over a third of the contributions came in the form of bitcoin. So I think that kind of caused there to be a larger bitcoin contingent within the community. And even I, I got into Cosmos because I saw it as the way of building the app layer for bitcoin. So that's always been my end goal. So that being said, how do we do this? Right. So actually first of all, how do we do this? There's already been a big lot of usage of Bitcoin within the Cosmos community. Right. Thorchain actually is currently the biggest bitcoin dex by volume value for native Bitcoin.
**A** (31:24):
Right.
**B** (31:25):
If you look at you know, Babylon is this like project that's building, restaking for Bitcoin. Even Tara, if you, if you remember like Tarot like was built, was building up bitcoin reserves like as to back the stable coin. It was a, it was a bit too little too late. But like that was still, that was the direction they were going to. And so I think there's a, I think Cosmos has one of the biggest ecosystems outside of EVM world, but we don't have that same base money in the same way as eth. Right. And I think the way for causes to get to the TVL levels of something like the Ethereum ecosystem is to build, to build, bring in Bitcoin. I think that's the only way you can build something that can provide as big of a ecosystem as Ethereum.
**A** (32:22):
Do you know of other ecosystems that are focused on Bitcoin like this or do you think Cosmos has a chance to be the first big one?
**B** (32:32):
I think it's so obviously there's the native one stacks for example, but I think it's a little bit too small. There's just not enough network effects there. It's not getting that sort of adoption. Avalanche has done a good job, has actually brought over quite a bit of Bitcoin. So if you look at their, built their own bridge and it's called btcb. And if you look on Trader Joe, which actually a lot of the top pools are for btcb. So Avalanche has actually done a pretty good job at bringing over Bitcoin but it's still not there. Focus. Right. I think there's, I think that Cosmos has that potential to be like this is like this is our focus is to be like the bitcoin app layer. Got it. So how do we plan on making this happen? Like honestly we're kind of standing on the shoulders of Thorchain quite a bit here because Thorchain has built one of has. So okay, two steps, right? One is we're working on sort of two, okay, three pronged approach. Number one is native wbtc. So we worked closely. So in Ethereum, wbtc which is like the bitgo wrapped bitcoin is like the biggest, is the main representation of Bitcoin on Ethereum. And if you look on Ethereum on Uniswap and stuff. WBTC is actually still like one of the top, always top five pairs basically. So there is quite a bit of Bitcoin trading happening on Ethereum. It's just in the form of WBTC wrapped by Bitgo. And so what we saw was like, okay, there's demand for Bitcoin and people seem comfortable with wbtc, but now you have this additional bridge risk that you have by having to use tax law or something, bridge over wbtc. In the same way that people had preference for like Cosmos native USDC instead of bridged usdc, we saw like, okay, there's going to be a demand for native WBTC instead of bridged wbtc. So that's why we worked with Bitco. We actually saw the initial issuance of WBTC. You know, it's only been $10 so far, but you know, expect to see a lot more start to be minted in the coming, coming week or so. So that's number one. Second is Nomic. So the biggest problem with WBTC while, you know, two problems, one is yes, it is still trusted in a centralized custodian, which is Bitgo. But two, there's not a way for a normal user to go back and forth between Bitcoin and wbtc. That's true, yes. It's. So you have to be like, what, what do you call a merchant? Which is like, you have to like do this like long KYC process with Bitgo that allows you to like mint and burn wbtc. So the Osmosis foundation went through this process. We have a couple other market makers who are going to be ready to mint WBTC on Osmosis. But this is where NOMIC comes in. Nomic is a bridge that allows you to. One, it's decentralized, it actually has a validator set. And two, anyone can just send Bitcoin on the native Bitcoin chain and it will mint. It'll. It'll like bridge the as NBTC on Osmosis. So this is like truly decentralized bridging. Anyone can use it. You want to send Bitcoin from Coinbase or Binance straight to awesome to Osmosis. You can do that via knob.
**A** (36:10):
Okay, and by decentralized you mean rather than just like a multi sig with possibly the same person, right, being all the addresses that the validator set takes the place of the multi sig. So it's just. Yes, the chances of it being compromised are way less. There's more, more parties there and presumably they don't all know each other. Like with a Multi sig. They're all going to know each other, possibly live in the same, the same apartment building, who knows? So, all right, that sounds good. I wasn't even sure how Nomic was going to fit into it. What about native btc?
**B** (36:44):
Yeah. So the third one is using Bifrost. So Bifrost is a bridge solution that was built by, by the Thor Chain team and that's how they actually do their swaps. But due to ideological design reasons, Thor Chain doesn't want their bridge technology to be used as a bridge. They only wanted to support swaps right on Thor Chain, which is fine. I understand where they're coming from, but they've built this amazing tech and I feel it can be repurposed into a generalized bridge. And what's nice about. So I actually think that there's a big trade off. There's a trade off between the Nomic and Bifrost design. Bifrost is once again the Thor Chain model. Nomic, in my opinion, is more secure. It has a little. It, it has some better tech built on it. I think it's better tech. Basically. It has more functionality features that I really like, but it's very Bitcoin specific. It makes use of a lot of the recent updates to Bitcoin that have happened over the last four or five years. It makes use of some of the new opcodes and Segwit and stuff like Taproot. Bifrost is so generalized that we can point it not just at Bitcoin but we can point it at dogecoin and litecoin and, you know, anything that like it. It's not bitcoin specific even though it does work for Bitcoin. And so that's why, you know, we want to have this dual bet where we're working with Nomic but also having a more generalized Bitcoin bridge because it also having competition is also helpful because it, you know, makes sure fees. Competition leads to like lowering of fees for the end users.
**A** (38:28):
Yeah, I was going to say you have, you give people the choice, you know, fees are going to play a big part. And also people that are knowledgeable will be able to discern between what's more secure, what's maybe not quite there yet with security. But either way to be able to bring Bitcoin to any decks is going to be huge. I know that. I talked to Shane from Stargaze. He was optimistic that Stargaze would be able to bring in ordinal inscriptions via Nomic as well. Somehow I don't, I don't know the mechanics of it. But using nomic to bring in inscriptions, I mean inscriptions are outperforming Ethereum NFTs in different windows of time. Doge has inscriptions as well. So there's that. Now Cosmos can become kind of like this all purpose ecosystem. Kind of like how Thor chain is like this decentralized swapping chain. Cosmos could be in the middle of all the different ecosystems even if they don't enable ibc. It sounds like you have first mover advantage there as the, as the, I want to say first decks, you're like the first app that people could actually use quite easily in the whole, in the whole ecosystem. Yeah.
**B** (39:39):
Sorry, what was the question again exactly?
**A** (39:41):
No question. I was just, I was just riffing there. It's all right, it's a surprise. It's the first time it's happened. But I, I, I do have a question about like the osmosis. Obviously if you could get involved in bitcoin, especially native bitcoin, that's going to be huge. But most of your business is not going to be bitcoin, at least in the beginning.
**B** (40:01):
Correct.
**A** (40:03):
For a user. You go in there. I want to lp. I've used other dexes before. Wait a minute, I see all these different pools. I got supercharged pools. I got these other pools. It seems like the supercharged pools, which is concentrated liquidity, they're more capital efficient. Would you say that's like the preferred type of pool for the decks in terms of monetization?
**B** (40:24):
Yes, because it just, it's just what naturally is gonna happen. It's preferred from the decks from the perspective that like you know, right now the dex hat does put liquidity incentives. The amount of liquidity incentives the decks has been putting has been going down and it will continue to go down as like volumes are increasing. And a lot of the feedback fees just value just comes from like revenue, like actual trading fees for lps. So but you know, the dex wants to be efficient with its like incentive spend. Right. So instead of spending so much on like it can provide, the more people concentrate their liquidity, they get higher aprs, which is good because we, the, the decks can spend less and incentives just still give the same trading experience for the same result.
**A** (41:17):
Yeah. And I think, I think one of the things that hurt the osmo token, I would say it hurt the token, but Osmosis launched at like the perfect time, like market conditions wise. Airdrop got people excited. Definitely pulled in people from other ecosystems. I was luckily staking Adam. I didn't know Anything about Kepler. I just happened to be staking Adam in an Exodus wallet because they, they offered support for that. I see the OSMO airdrop. I didn't even know about airdrops. Now I'm basically 90 in Cosmos because of that. But, but then there was like the tendency to over incentivize pools involving tokens that just like we're not doing it. They were just there to be there. There was no reason to even have a lot of these tokens. Right. The validator sets and the people voting yes, triple digit for this pool. Triple digit for this pool. Can that be avoided going forward by putting some guardrails on the amount of incentives which pools get? The incentives can concentrated liquidity completely replace in some cases these inflationary rewards that could hurt the token price. You know you got this mercenary capital moving in. How do you see that shaking out now that we're in Osmo 2.0.
**B** (42:32):
Yeah. So you know I, I know there's a lot of critiques about the OSMO inflation that was spent well a lot.
**A** (42:41):
Of the critics were in hindsight. Right. Like I could sit here and say two years ago you should not have incentivized Kerberos. The validators are stupid. Why did you do that? But it's, it's all in hindsight. Right. So yeah, during the time it's like market's Great. Adam is $40. Look at these airdrops. So but yeah now that you knowing what you know now there's going to be another market cycle.
**B** (43:02):
Yeah.
**A** (43:03):
Can we set it up to kind.
**B** (43:04):
Of soften the blow this time around Osmosis Like I, you know I put up this proposal that like we, we pull all incentives from like non major pools basically. Right. Like no more small and mid caps being.
**A** (43:21):
I, I would have loved that. Like yeah. 9 months ago that was like my biggest criticism of OSMO2. This doesn't go far enough because some of these pools probably shouldn't even exist other than Frontier Permissionless. But they're getting incentives. Let the, let the underlying tokens incentivize those pools externally. That doesn't make any sense to have whatever. I don't want to name the tokens but I name them on you know some of the tokens don't have a corresponding app.
**B** (43:47):
Yeah.
**A** (43:47):
But they're getting OSMO rewards anyway. Keep going. Sorry.
**B** (43:50):
Yeah. So basically now incentives have been limited to basically just a handful of tokens which is basically state like USDC and Tether Atom, osmo oh WBTC and eth like Bitcoin Right, right.
**A** (44:11):
Yeah, that makes sense.
**B** (44:12):
And then LSDS is the other one. So we, We. We still do like. Yeah. And then I guess now TIA has been at, you know, has been bumped up from the.
**A** (44:24):
It's.
**B** (44:24):
It's joined the club of major cap assets.
**A** (44:27):
That's the one that I have open right now. Yeah. So it's interest, so it's pool. I'm looking at pool 1247 as TIA USDC. I could see that the. Let me just, Let me, Let me bring this up. People can see what I'm talking about because this is a good way to highlight the. The effect of supercharged liquidity and external incentives. So it's the third one down, and if I pass my mouse over here, I can see that the swap fees are basically triple what the OSMO boost is. Right. So this is the direction you want to be going, it seems. So that you could allocate that. That OSMO inflation elsewhere. Right. If you could somehow get. You somehow get high amount of liquidity without pummeling the token price. That's ideal. Two years ago, obviously, I don't think that was possible. Right. That was like really the beginning of Uniswap version 3. So they were like the only ones probably doing that. And here's another one where I have swap fees accounting for a nice 22 boost for. I should say boost 22% revenue for the LPs, get a little bit of an Osmo boost 1%. Okay.
**B** (45:37):
It's.
**A** (45:37):
It's not much, but then what's the super fluid? That's to. That's. That's what we were talking about before. So this underlying token can then be used in super fluid staking. So it's being staked. Right. And that 4.9% is paid in Osmo or Tia or both.
**B** (45:54):
That 4.9% is paid in OSMO right now.
**A** (45:58):
Okay. And if. If Tio wanted to, could they also externally incentivize this pool further?
**B** (46:05):
Yep, you can, because.
**A** (46:06):
Yeah.
**B** (46:07):
Yes. So you could see. Let's see, you go. Can go down finding an example of one.
**A** (46:14):
Nope, that one is not. Well, can I sort. I could. I could sort here, right?
**B** (46:21):
Yeah. Oh, you can go down to. Oh, yeah, you can actually sort. You can go to incentive types. You can click, uncheck everything except for external incentives. Basically.
**A** (46:30):
Yeah. So here's, here's Pika. Right. This is Picasso, obviously, if they're not even technically part of Cosmos, they want to externally incentivize their token. And you're getting no OSMO rewards here, but it's still 45 APR for people that want to pull Picasso's is a Dex substrate. Is it? Is it? Is it. It's polka dot.
**B** (46:53):
No. No. So Picasso is.
**A** (46:58):
Or composable.
**B** (46:59):
Yes, it's the project from composable. So it's a bridge between. Currently it's an IBC extender to polkadot, but then they're working on IBC extensions to other ecosystems as well.
**A** (47:16):
Anyway, I got really only one more community question came from, from somebody in my telegram, don't know who it is. And then we could wrap it up. I think I've. I've hit all the noob questions that I could hit for this round and if we forget anything. Of course you could, you could add it in. All right, so community question. I'm going to read it word for word, but this is something you would definitely know about. So it's about relaying, right? Average user is not going to know too much about relaying. I didn't know much about it till very recently. So it says relating relaying is getting to be costly and it's going to get more expensive with community pools and chains being asked to pay validators and relayers for this service. Ask Sunny how he sees the resolution of this issue or the next evolution of relaying on Cosmos. Can't people self relay and pay the fees themselves?
**B** (48:06):
Yeah, so I think self relaying. The end goal is self relaying. I think the biggest challenge is.
**A** (48:15):
H.
**B** (48:15):
Let's say you're sending tokens from osmosis to, I don't know, stargaze, Right? Stargaze. At the moment you need stars in order to pay your fees. But if you're trying to send usdc, let's say, let's say you don't even have an account yet. The way it's set up right now is you can't pay for your IBC pack. To send an IBC transaction, you have to make a transaction on the other chain. And the problem is to make that transaction you need to have fees. And right now you can't do that if you don't already have an account there. And so you're kind of stuck in this like chicken and egg problem. So there's a bunch of different solutions sort of being developed right now. One is this like, like fee tip kind of thing where you can just like pay a tip that then a relayer can. That you can pay a fee that then the relayer who submits your transaction will get that fee that you get. So that's one.
**A** (49:16):
And based on the token you're tipping in, the relayers can choose whether or not to accept that. That makes sense.
**B** (49:22):
So that actually solves the incentives problem of ibc. It still now needs a class of people called relayers to do the relaying. Right.
**A** (49:32):
This would just be in the wallet eventually where people are like, hey, you're doing an IBC transaction, you got to relay it. There's two ways you could relay. Which way do you want to do it? Something, something like that. Yeah. I think by do the validators want people self relaying if they're going to get these nice subsidies from the community pools that seem to be unevenly, you know, it's kind of like a first come, first serve. Whoever puts up the prop is going to get, you know, this initial subsidy for relaying. It's, it's, it does seem like it could get out of, out of hand before it gets better.
**B** (50:02):
Yeah. So that is a, it is a pro, a challenge. The other thing that also is, well, I mean, eventually that's where it has to go. Right. I think these subsidies are there as a stop gap until we have the proper solution ready. I think once the proper solution is ready, it'll, you know, everything will shift to work. I think the question of will you still have relayers and have this incentive fix or will it actually switch a true self relaying? I think that's the question. I think eventually we'll shift to true self relaying and you know, we have some ideas of how to do that, but I think that might be a bit farther away. I think the incentive compatible relaying will probably. We'll see that much sooner.
**A** (50:44):
All right, well, Sunny, this was great. I really appreciate, you know, being able to connect, talk about osmosis firsthand with the co founder and you are like the community facing figurehead of osmosis. The people are gonna really like this, gonna like this chat and yeah, I mean, hopefully we could do it again in a couple months as we see more developments, more apps on osmosis and of course more just more improvements as we get to be not only the number one Bitcoin decks, but the Robin Hood of Web3.
**B** (51:15):
Yeah.